What happened

Shares of Nightstar Therapeutics (NASDAQ:NITE), a clinical-stage gene therapy company, jumped by a noteworthy 67.48% in pre-market trading today.

The spark? Nightstar's shares are bolting higher in response to an $877 million buyout offer from biotech heavyweight Biogen (NASDAQ:BIIB). Per the terms of the agreement, Biogen will pay $25.50 in cash for each share of Nightstar, which translates to a hefty 68% premium when compared to where the gene therapy company's shares closed on Friday. According to the two companies, this transaction should close by midyear.

An elderly man having an eye exam.

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So what

It's no secret that Biogen has been on the hunt for the right deal for the better part of the last two years. And the biotech's patience appears to have paid off. Nightstar's late-stage gene therapy NSR-REP1 for choroideremia (a rare, retinal disorder that has no available treatments) is expected to generate over $700 million in annual peak sales, if approved. That amount should be more than sufficient to keep Biogen's top line growing for years to come.

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Now what

Prior to this announcement, Nightstar's 12-month price target stood at over $32 a share, thanks to the growing optimism about NSR-REP1's chances of becoming a major advancement in the treatment of choroideremia. Biogen, therefore, may have just gotten an outright bargain for Nightstar and its high-value gene therapy pipeline.

That said, Nightstar's shareholders will no longer face the possibility of a devastating clinical or regulatory setback if this all-cash deal goes through as planned. Sometimes, it's simply better to have cash for your shares -- especially in the risky world of pre-revenue biotechs.